Alliance Trust managers on losing £24m on their fund shop and why they're not selling yet
Amazon is one of Alliance Trust's biggest holdings Credit: Jane Barlow/PA
20 April 2018 9:48am
Alliance Trust launched 130 years ago, but has undergone a total transformation in the past year.
The trust sold off the asset management business it owned (which also ran the funds money), its chairman and chief executive left, and it appointed eight fund managers to run the portfolio.
The changes came after activist investor Elliott Advisors built up a large stake in the fund and publicly demanded change to turn around performance at the ailing trust.
The new fund managers selected by David Shapiro of investment consultant Willis Towers Watson each run a concentrated portfolio of their best ideas, investing in around 20 stocks.
Trust chairman Lord Robert Smith of Kelvin and Mr Shapiro sat down with Telegraph Money to talk about how the first year has gone.
How has the first year of the new portfolio management been?
Lord Smith: This has been quite a year. Weve gone completely back to our roots. Performance has been good; we said wed target 2 percentage points above the index and we have done that. Weve increased the dividend by 3pc, the 51st year of increased dividends thats something were committed to.
How do you pick managers?
David Shapiro: When we pick managers we want them all to be specialists in different areas. There are 187 stocks in the trust, and the most overlap we allow is two stocks being held by different managers. They are a mix of global managers some are based abroad like Bill Kanko at Black Creek, which doesnt have a UK presence.
Even where its a manager available in the UK, like Hugh Sergeant at River and Mercantile, this is the only way you can get his 20-stock portfolio. LS: Our investors could not get these managers directly. This is unique.
How do you decide how much each manager is allocated?
DS: Its not an even split its a bit like picking your favourite children, its very, very difficult.
We dont know whose style will be in favour in any month, so instead of giving equal amounts of money, we give them an equal amount of risk. If a portfolio is more volatile we give them slightly less money, even though we love them just as much.
When we get money into the fund or are shrinking, we take away money from the best performing manager and give it to the worst performing manager.
The discount reached 13pc. How did you reduce it?
LS: There was quite a large discount two years ago. It now hovers around 5pc and were pretty comfortable with that.
We will manage the discount around that level. Id like to think that once people see the first year of performance, they will want to invest, and if we get to a small premium we may issue more shares and grow the trust.
Alliance Trust has been around for 130 years Credit: The Alliance Trust archive
With many underlying managers, does the trust cost more?
LS: We have said the management fee wont go above 0.65pc and its currently 0.62pc.
DS: That covers everything. The nearest comparable for a multi-manager fund is Witan, which is 0.75pc plus whatever performance fees theyre paying their managers.
We can get the underlying managers more cheaply, as they see this as long-term money and value the relationship with us.
You still own the investment shop business Alliance Trust Savings how has that performed?
LS: We have had complaints about the platform. There have been performance issues. This year the board decided it wasnt as valuable as we thought, so we have taken a write down [the trust cut its valuation of ATS from £61.5m to £38m].
Because of the performance issues they put a lot of extra people on it to make sure the performance improved, but in doing that they ran up quite a lot of costs, so they will show a loss this year. There is no sale process at the moment.
Do you both hav
Questor is having his / her normal dig at Alliance again today. Whatever the underlying reason for this Questor seems unable / unwilling to give Alliance any half decent publicity.
As an example what really got to me this morning or is there something I am not understanding?
"The change in management has attracted other costs. Each time a fund buys or sells a share or other asset there are associated fees wholesale changes such as those undertaken by the trust come with a price tag."
Any share purchase / sale attracts dealing costs even for the big boys and then there is always the government stamp duty on purchase so why pray does Questor have pint out the ble eding obviou?
Here is what Questor's article ( I hope that I am not breaking any laws by copying & pasting this!!):
""Its not often a trust that has been around for 130 years is judged just on one years performance, but that is the case with Alliance Trust.
The £2.4bn investment trust underwent an overhaul a year ago, selling the fund management business it owned, which also ran the trusts portfolio, and moving to a multi-manager model run by consulting giant Willis Towers Watson.
Regular readers will be aware of the high-profile problems the trust faced after activist investor Elliott Advisors took a large stake and publicly petitioned for change.
The move resulted in the chief executive and chairman departing, the sale of the asset management arm to Liontrust and an about turn in strategy.
The trust now allocates money to eight fund managers, investing in global stock markets. Gone are the fixed income and more esoteric holdings of the past.
This month marks the first anniversary of the trusts new direction, so how has it gone?
It has met its target of outperforming the MSCI All Country World Index by two percentage points a year, returning 4.9pc on a net asset value basis. Yet the share price return lagged, at 3.9pc, because of a lingering discount.
The discount has also narrowed it was 13pc at the peak of the conflict with Elliott, and is currently 5.6pc, in line with its 12-month average. The board says it is happy with this level.
The board has carried out a large swathe of share buybacks in the past year and also negotiated with Elliott to buy back all of its shares, leading to a further shrinking in the trusts size from £3.1bn a year ago to £2.4bn.
This is progress, but other obstacles remain. The trust kept hold of Alliance Trust Savings, the investment shop business. In the past year, the platform has continued to struggle to integrate its acquisition of rival Stocktrade and undertook a costly relocation.
Lord Smith of Kelvin, chairman of the trust, did not rule out a sale of the business, but said there is no sale process in place at the moment.
It is only just over 1pc of assets of the trust, but it matters, and I want these problems solved, and they will be, he added.
Alliance Trust Savings will make a loss this year, and the trust slashed the value of its 100pc holding of ATS from£61.5m to £38m.
The sale of the asset management business to Liontrust was more successful, handing the trust £10m more than the £25m projected.
The change in management has attracted other costs. Each time a fund buys or sells a share or other asset there are associated fees wholesale changes such as those undertaken by the trust come with a price tag.
Existing investors would have paid an additional 0.18pc as a result. That is not an insignificant amount when you consider the trust has imposed a 0.65pc cap on charges.
Alan Brierley, of broker Canaccord Genuity, said that the trust has had a highly encouraging start and also believes the current discount is due to historical issues with the trust rather than fears over performance.
A year ago Questor said it was too soon to judge whether the portfolio changes would be successful and the savings arm was a distraction. Instead we tipped rival Witan, which has been running a sim
I have decided that I have not been too clever regarding ATST. When it was announced that they were buying out the whole of Elliott Brothers holdings I had the feeling that the share price would suffer as they would have to sell other holdings to fund the purchase.
I sold some of my own holdings (to maximise my CGT for the year) and those of my 4 grandchildren in both JISA's and First Steps Accounts. The average price we managed to obtain was in the low 670's.
The funds were reinvested elsewhere but any resulting gains have come nowehere near to that achieved by ATST over the last 6/8 months.
I first invested in ATST in 1990 and with the dividend reinvestment had seen my original investment rise tenfold over the intervening years and those of my grandchildren double / treble since they were taken out in the late 2000's
I have now decided that my reading of the markets is not as good as I like to think and if ATST dips back down to the low 700/690's in the coming months I am thinking to reverse the trades made in February and reinvest in ATST.
Sometimes being unable to sell due to cap gains tax can be an advantage!
Meanwhile ATST looks attractive when compared with the recently launched Peoples Trust. PT is a similar vehicle but without the discount/size & lower costs of ATST.
Sadly the ATST buybacks continue - to maintain the discount - but at least they are reducing.
What can I say? I've still got plenty of ATST so still very interested but the article paints a very one sided picture of what has actually happened.
The trust was sleepy for many a year, one of it's great attractions to many of us at the time. It's holdings weren't that dissimilar to the FTSE100 with few 250 stocks chucked in for good luck (but relatively small in size) and it's total (and I mean total) annual cost were around 25bp. When you could pick it up at 15% sometimes 20% discount that meant that the yield pick up from buying the index at that discount more than paid for the expenses - a less than zero cost tracker in disguise. Not everyone's cup of tea, certainly not IFAs or anyone selling/marketing investments as no income for them, but brilliant for an investor who wanted general equity risk (& return) but didn't want to pick stocks themselves.
Then KGC. Well that upset the apple cart. Costs through the roof, no small part down to her compensation package but a plan to become a 'player' in the broker market - not what I wanted but difficult to stop her.
Anyway performance did fall off, mainly due to the costs and the discount widened as a result. Me, still buying as the NAV was just about holding up to scratch, other fund managers/administrators fees/costs were just as bad and, at the end of the day, the wider the discount, the better when buying (as long as the NAV is holding up to a decent benchmark).
That article has some facts in it but is biased as hell from the 1st word.
Anyway, I could rip holes in that article left, right and centre but, long story short - It's written by friends of the investment management businesses. WTW will earn fees for managing the portfolio. ATST can only justify that by getting of the in house 'costs' then they have no internal people capable so have to keep paying fees to external managers. Great for the big fund management business, bad for ordinary investors IMO. If WTW are so good, why haven't they got their own ITs (and/or funds) out there that the whole world is flocking to in massive droves?
This is giving up. IMO a very, very bad idea. It's not going to happen but either sack everybody, wind the trust up and return NAV (less 1% or so costs) to the shareholders then resign and turn the lights out as you leave...
or maybe go back, run it simply, as cheaply as possible, pick an index, basically match it while looking for the odd opportunity on the side - nickel and dimming we used to call it but a way of beating a benchmark by by a touch even after costs. Not very exciting but consistent. Not everyone's cup of tea but it setting a standard and keeping it would put them in a small minority of maybe 5% of all Investment Trusts out there - not necessarily in the top 5% performing trusts but 'did what we said we would 5%'.
Alliance Trust dreams of 'multi-manager' gold after years holding wooden spoon
Global trust begins new era under multi-manager specialist Willis Towers Watson, which has been told to deliver index-beating returns.
Alliance Trust (ATST ) hopes a new era of 'multi-manager' investing will boost shareholder returns after the global investment trust underperformed its stock market benchmark last year.
The trust's portfolio posted a net asset value total return of 21.5%, well above the 5.4% achieved in 2015 but behind the 29.4% return from the MSCI All Country World index.
In its 2016 annual results the Dundee-based company blamed its previous managers at Alliance Trust Investments, which it is in the process of selling to Liontrust.
Stock selection, particularly in financials, accounted for most of the performance shortfall, but an 'overweight' position in healthcare stocks, which suffered last year, and an 'underweight' stance in energy companies, which rallied with a rebound in the oil price, also held back returns.
Alliance believes its decision to appoint Willis Towers Watson (WTW) as its new investment manager following a strategic review will allow it to avoid the vagaries of single fund managers in future.
WTW will run Alliance's £2.6 billion portfolio with a high conviction, multi-manager approach, meaning it will appoint a panel of eight different fund managers to run portions of its assets using their best investment ideas.
It has been told to to beat the MSCI AC World index by 2% a year.
Speaking to shareholders last month before their appointment was approved, Craig Baker, global chief investment officer at WTW, said using a conventional single manager left investors hoping they could find a superb all-round athlete like Dame Jessica Ennis-Hill (pictured), winner of heptathlon gold at the 2012 London Olympics.
Although Ennis-Hill's achievement had been unforgettable, Baker argued a multi-manager arrangement was superior as it held out the possibility of hiring a team of Olympian-level specialists.
If you had the luxury of a team made up of seven individual specialists producing seven medals not just one and seven better results, which would you go for?
Alliance has had a difficult two years following a battle with US hedge fund Elliott Advisors over underperformance that ultimately led to the ousting of chief executive Katherine Garrett-Cox last year.
Chairman Lord Robert Smith (pictured below), who now leads a new board completely staffed by independent non-executive directors, said the 'appetite for global equity' remained strong but that the trust needed to change and improve performance.
'The board and the new investment manager will now focus on delivering real returns for shareholders through a combination of capital growth and a rising dividend,' he said.
Richard Troue, head of investment analysis at Hargreaves Lansdown, the funds supermarket, said the results were disappointing but hoped the new investment approach would deliver a fresh start for the trust.
He added that the pressure will be on to meet the new outperformance target in order to vindicate the strategic review, not to mention turning around several lacklustre years of performance, and justifying an increase in charges to boot.
We believe the change in strategy is entirely sensible on paper, although it will be several years before we truly know if it is adding value in practice, said Troue.
Kieran Drake, investment companies analyst at Winterflood Securities, said the appointment of WTW was a positive step although he believed the trust was no longer the bargain it was following a narrowing of the discount.
The gap between Alliance's share price and its underlying net asset value (NAV) had stood at just over 8% at the start of last year but reduce
It was inevitable, me voting against it making not the slightest little bit of difference (as usual).
Market reaction? The $ strengthens (maybe more due to Trump sounding almost reasonable rather than the usual lunatic), the S&P up 1.5%, FTSE100 up 1.6% and ATST.....record highs but less than 1.2%. Haven't done the arithmetic yet but instinct says that discount is now more than 5%.
ITDYA wishing he had got some away yesterday and wondering why the hell he didn't.
The Board of Alliance Trust PLC (the "Company") is pleased to announce that all resolutions put forward at a General Meeting of the Company earlier today were passed.
The proposal that the Company should change its investment mandate for the equity portfolio to a multi-manager approach has therefore been adopted. Arrangements for the new approach will now be finalised. It is expected that the Company's new investment manager, Willis Towers Watson[i] and the eight new underlying equity managers will have been formally appointed by early April. The Board will provide updates on this process as and when appropriate.
The proposal that the Company should repurchase all Ordinary Shares in the Company in respect of which Elliott International L.P., the Liverpool Limited Partnership and Elliott Associates L.P. (collectively "Elliott", the Company's largest beneficial shareholders) has a disclosable interestii, has also been approved. In accordance with the terms of the Repurchase Agreement between the Company and Elliott, Elliott's Shares will be bought back in five tranches, in each case at a price representing a 4.75 per cent. discount to the Net Asset Value per Ordinary Share on the business day immediately preceding the relevant trade date.
Authority was also received from shareholders for the Company to increase its share buyback authority by a further five per cent. The Board remains committed to its proactive approach to buying back Ordinary Shares, and going forward is prepared to do so at or around the same discount level as that of the share repurchase from Elliott so long as it is in shareholders' best interests.
Commenting on the announcement, Lord Smith of Kelvin, Chairman of Alliance Trust PLC, said:
"The Board is pleased to announce that all resolutions have been passed, and, in particular, is delighted by the 96% level of shareholder support for the new approach to investment management.
The aim of the new approach is to achieve consistent outperformance at a competitive cost, with a progressive dividend policy. The focus of the Board and the new investment manager is to deliver on those ambitions for many generations to come."
A summary of the votes cast in respect of the resolutions is set out below.
Resolution Votes for % Votes against % Votes withheld
1 Authority to repurchase from Elliott 118,868,085 77.29 34,920,649 22.71 53,564,162
2 Authority to buyback up to 95,478,576 shares in accordance with Repurchase Agreement 172,229,633 83.41 34,265,850 16.59 756,783
3 Authority to increase buying back of own shares by 5% 202,613,623 97.87 4,406,037 2.13 333,113
4 Support to change to multi-manager investment mandate 146,478,103 96.03 6,057,385 3.97 54,813,426
In accordance with Listing Rule 9.6.2, the full text of resolutions 2 and 3, which were special resolutions, passed by the Company at its General Meeting today has been submitted to the National Storage Mechanism and will shortly be available for inspection at http://www.morningstar.co.uk/uk/NSM
I don't know why you didn't get a chance to vote. I gave HL my instructions yesterday (against the amendments proposed in my case) who assured me these would be amalgamated with others' views and forwarded to BLVN. Your late post? (Mine came last Saturday.)
Being a long-term ATST shareholder, I was looking forward to getting a chance to vote on the proposals. However, as my ISA is now with HL, I didn't get that opportunity.
I probably would have voted against the proposal to increase yet further the buy-backs, as the trust has shrunk enough. I know that buy-backs at a discount of 5% enhance the NAV a little, but the cost of running the trust won't reduce all that much, so I'm not convinced of the benefits. I was comfortable with a discount in the region of 10-15%, knowing that I was getting an enhanced yield and wasn't concerned about fluctuations in the discount over a long time.
I would probably also have voted against the proposal for a multi-manager mandate as it complicates matters and increases costs, and again I'm not convinced of the benefits.
Favouritism: yes, an issue for me. Not just in this case but in every case where one shareholder is 'favoured' with a special deal not offered to all - all shares are equal but some are more equal than others it seems.
And every time it's either some City insider (e.g. a placement to an institution at a discount) or one of the big 'private' investors. The problem here (IMO) is that, to offer this same deal to all risks everyone taking it and the trust being wound up as a result - Wind up the trust? If it meant getting NAV less a percent for costs I wouldn't be crying - all mine are SIPPed but it would be an issue to know how best to reinvest a chunk of change that large quickly as I wouldn't want it hanging around in cash for long.
But they are not going to do that, any more than turkeys would vote for Christmas. Best hope as far as I can see is for the board to adopt a long-term discount management plan with the funding coming from either debt (hopefully only in a rising market and good luck to them if they can time that right every time - if they could there would never be a problem with a discount!)) or further disposals.
Funding by asset disposal means a smaller market cap but spread over fewer shares as those bought back are cancelled. That keeps that side of the equation in balance (on paper might even improve it a touch as they will only be selling 95.25p worth of shares to cancel £1), Dividend similarly unaffected. However there is a problem in that, as the overall value of the trust shrinks, the overheads rarely tend to shrink as quickly (if at all).
As for the outsourcing, yes, they have abdicated the key responsibility of any pooled investment. Then again, if it's done at minimal cost, leaving them to concentrate on getting all other overhead down to as near zero as possible...... dream on - the fees they will pay to Towers Waston (suggested as fair during the review by.... Towers Watson) are way too high and the management aren't going to sack 2/3rds of themselves and a big chunk of the staff.
Me, still looking for any/every opportunity of offload chunks anytime I can calculate the real-time discount at about 4.75% but where to put the proceeds? I know, loads of opportunities but ATST has, over many years, been a safe place for my pension money about which I've rarely had to worry and, in reality, after careful count back, despite the KGC costs, my investment has beaten the FTSE100, all dividends reinvested - not by much but 'net, net, cash in, cash out, better than the market' is a feat very few achieve..... then again, that's probably only because for years I was salting money away at 15% and higher discount and now all of this is being valued at about 5.
Better lucky than clever but definitely a moment to be thinking very seriously as luck has a habit of running out.
"Unfortunately CGT would take quite a chunk if I sold any more."
"that has to have a rather large and sudden impact on future dividends, or is Alliance Trust somehow going to invest in itself? Or have I got it all wrong?"
I'm not an expert in ATST, especially now that the fragrant KGC has left the building, but surely the Elliott shares will be cancelled? So there should be a good opportunity for ATST (or, more likely, their highly paid locust "advisers" LOL) to raise the wonga for Elliott by dumping the dross part of their portfolio, which would leave 'em free to maintain the divi on the reduced share base or even raise it if the dross happened to be low yield stuff innit?
Personally I'd never touch ATST with a bargepole now that they've abdicated their responsibility for throwing darts at the board to the afore-mentioned locusts.
I have sold out some of my holdings of ATST. Unfortunately CGT would take quite a chunk if I sold any more. I have also sold out my grandchildrens' JISA's and reinvested temporarily in HSBA.
The big problem as I see it is that nobody seems willing to highlight is what likely to happen to the ATST share price and NAV after Elliotts have fled the scene with all their bags filled to the brim with their loot!
I did a rough calculation and by the time Alliance Trust has bought Elliott out, forget us lowly private investors, Alliance Trust might have had to sell about 20percent of their current holdings just to provide the booty for Elliotts. Now that has to have a rather large and sudden impact on future dividends, or is Alliance Trust somehow going to invest in itself? Or have I got it all wrong?
If someone somewhere, just thought to tell everything as it is rather than just sweep it under the carpet I am sure that more of us poor investors would be happy to stay with ATST.
By the way Alliance handed out a list of all shareholders in ATST to some marketing company to assess the way shareholders might vote. They did not care too much about how they went about this. My daughter took a telephone call with someone wanting to speak to my 8 year old grandson to find out how he would vote! Can't they get anything right?
KGC has a lot to answer for even though she has been flushed down the system!
"more diverse shareholders"=people in nominee accounts such as ATS who won't vote or will vote the way we'd like them to.
I'm glad murmors are being heard. Ownership of shares here has been akin to quiet financial rape. In about 2000, someone spotted a huge pool of assets with minimal annual cost, that they could get their hands on and increase the fees, share the joy between their friends and know that they probably wouldn't be spotted. I really hope all shareholders are offered the same deal and I speak as someone who sold out a rather large holding during the recent rises.
Alliance Trust faces revolt over share buy-back 'favouritism
An attempt by the investment fund Alliance Trust to put an end to years of turbulence will face protests from shareholders this week over alleged favouritism and conflicts of interest.
The Dundee-based company has asked investors to approve a £620m buyback deal with the aggressive US activist investor Elliott Management, which holds nearly a fifth of its shares. Alliance aims to buy back the shares in five tranches, allowing Elliott to cash in its stake more easily and ending its running battles with the board.
However, institutional investors are poised to vote against the plan at a general meeting on Tuesday, after a critical report from the voting adviser Institutional Shareholder Services (ISS).
In a note to clients, ISS said shareholders should reject the proposal due to favourable treatment of the companys largest shareholder whilst others are not presented with a similar exit opportunity. ISS highlighted the fact that Elliott will be able to offload its shares at the lowest discount to the net value of Alliances assets in five years.
Alliance has also been forced to defend the appointment of Willis Towers Watson as its equity portfolio manager, part of a plan to cut costs by outsourcing fund management. It sparked controversy and criticism from ISS, as Willis Towers Watson also advised the company during the strategic review that led to its own appointment.
Willis Towers Watson was appointed Alliance Trust's equity portfolio manager
Alliance told shareholders last week it believed there was no conflict of interest and that Willis Towers Watsons role in the strategic review had been clearly defined. It is understood, however, that the decision has caused concern at some of the companys largest institutional shareholders, who could vote against the proposal.
In a letter to ISS seen by The Sunday Telegraph, Alliance attacked the advisers analysis of the buyback and accused ISS of basing its recommendations on factual inaccuracies.
"Opposition from ISS is a blow to Alliances hopes of a quiet end to one of the most difficult periods in its 129-year history."
Alliance told ISS the proposals had been positively received by others and that other shareholders were free to tender their shares to a buyback programme on comparable terms.
Opposition from ISS, which can sway a fifth of typical UK shareholder register, is a blow to Alliances hopes of a quiet end to one of the most difficult periods in its 129-year history. Beginning in 2010, the attack from Elliott on its performance, costs, executive remuneration and structure has triggered changes including the exit of chief executive Katherine Garrett-Cox.
Alliance will count on the fact it has a more diverse shareholder register than most large companies, with thousands of individual investors. ShareSoc, which advises small investors on voting, has backed the buyback saying it would avoid future pressure by Elliott and appears to be at a fair price.
As explainedin some posts about two weeks ago, I am very much in the same boat as you regarding CGT but I fail to see how the repurchase of all Elliotts shareholdings and CfD's by Alliance Trust will not cost us shareholders.
I have been quite happy with ATST shares for over 25 years now, but I wonder if we are being told the whole story about the effect these purchases will have on ATST SP and discount over the coming weeks and months.
Well I'm not sure about the buy recommendation but I do think at least some of us could do worse than 'hold'. It would take me 5 years to sell without incurring capital gains tax; meanwhile the quarterly dividends are useful.
Press comment seems favourable re. the revamp, discount now similar to the comparable trust Witan but with lower costs. Fingers crossed that the discount doesn't significantly widen.
I might possibly agree with you if I could fully understand what Alliance repurchasing their own shares and CfD's held by Elliotts will have on the SP and discount in the next few months. These repurchases are being funded by the sale of parts of the Alliance Trust current portfolio of shares.
Currently I have sold 3 lots of shares held by myself and my grandchildren at 671.50, 672 & 674.
What I would not like to see is the SP and NAV nosedive in the next few weeks without me trying to protect the short term outlook for our savings.
Any thoughts on what might happen are always most welcome as I try to understand what might unfold in the coming weeks.
Wish you the best for the weather tomorrow (or is it today now?) I dunno
but I guess what you don't need is some prestty bad weather that either keeps you from continuing your journey or perhaps, worse still, really hits you when you are out at sea!
Best of luck to you.
Took a punt and sold a tranche of my ATST today at 671.50, still looking at possibilities for my grandchildrens' pots.Have reinvestment in nother IT mind both for myself and the bairns.
Thank God for Google, something like 80 island all with strange sounding names, Herehertue and Puka Puka being just two examples.
You will use a French company to buy your diesel don't Exxon or Shell have any representation out there? At least in Blighty you can compare the prices charges by different filling stations so you can get a good price when you fill up. I don't suppose there is a similar facility for old salts travelling the Pacific Ocean.
I do think you are ebing very kind to KGC I would suggest that she did more than a bit to get her name on the map, building up ATST was always secondary to her plans for her own enrichment.
Enjoy the Pacific hospitatlity but perhaps beware of eating fish. The BBC had a piece last night about all the detritus tipped into the seas over the years by us humans much of which has found its way into the deep sea trenches like the Marianas and the sea life is becoming cancerous...... A cheerful thought a you enjoy a stiff finger!
"wherever you are in the Indian Ocean or is it the Pacific?"
It's the Pacific, m8. Currently tracking between Bora Bora and Papeete, thence into the Tuamotus.
It's a hard life, but someone has to do it. The price of diesel out here is something shocking. I blame Total.
It's interesting to follow the current lively debate about executive pay in Blighty. The fragrant one certainly did her bit to get ATST's name on the map in that regard and it is ironic that her greed calls into question not just the pay of the big bonobos at ATST but the existence of the entire goddamn corporate structure.
Good evening LKH wherever you are in the Indian Ocean or is it the Pacific?
This is the main reason that I am now looking at my holdings in ATST. I can clear my grandchildrens' funds out of ATST until the picture becomes more clear regarding the actual discount to share price and the effect the Elliott unloading has on the SP in the short term. I would put them into another IT (perhaps VIN which pays a good dividend but the actual SP movement is quite slow) until the picture becomes clearer and in which I have a small personal holding or look at some other IT with a10 -15 percent discount to NAV that pays quarterly dividends and doesn't pay a commission to any salesman who just happens to be passing the door.
For my own holding it will take 4/5 years minimum at current SP to sort out without the need to pay any CGT.
I agree about KGC, in it for herself not for the benefit of shareholders. And probably not too fragarant too boot. If ATST want to farm out all investment decisions and pay almighty commissions to would be "Woodies" why not just sell the whole shebang lock, stop and effing barrel to Aberdeen ,RIT or whoever. Then at least us poor shareholders could make a relatively informed decision.
"Alliance may indeed finally transform itself for the better."
One has to ask "What is ATST for now?"
You have a company which subcontracts stock picking to doubtless expensive third parties. If I were an investor who liked other people to pick my stocks for me (which I ain't for the avoidance of doubt ... I pick my own stocks) I'd choose a mob who picked stocks .... I wouldn't choose a mob who picked OTHER PEOPLE to pick stocks and which reamed me from ahole to breakfast in the process.
The fragrant KGC has a lot to answer for, my humble. She started the rot with her disgracefully high screw and, after her well-deserved defenestration, Elliott has completed the process by which the whole kit and caboodle might just as well be wrapped up and closed down.
LKH on the flybridge beneath that cold exterior there beats a heart of stone
"As I read it your beneficiaries can continue with drawdown, paying tax on income only as they draw the income over their years, so your SIPP becomes their SIPP going forward"
It's not entirely clear from the YouInvest link whether, if chummy carks it aged 80 (say), having not touched his pension fund, the beneficiary has to pay tax on the fund if he/she just leaves it invested. HMRC might argue that the beneficiary had nevertheless received a taxable lump sum.
I have my own Sipp (and Mrs LK has her Sipp) with YouInvest so perhaps I should just ask them the question. It seems incredibly generous, tax-wise, if one can pass an untouched pension pot down the generations completely tax free even if one dies after the age of 75.
I know this little boondoggle works fine, tax-wise, if one checks out permanently before the age of 75 provided one has nominated one's heirs to be the beneficiaries on death, but it seems almost too good to be true if there are circumstances in which it also works AFTER 75.
UPDATE: Alliance Trust
Many of Alliances 30,000 small shareholders will shortly receive or will already have received their voting documents relating to the trusts proposed buy out of a major shareholder, Elliott International, an activist investor since 2010.
If shareholders vote the deal through (and there is no suggestion they will not or should not) Elliotts slab of stock, valued at around £620m, will be bought by the trust. The remaining company will shrink as a result.
The important bit is that Elliott is being offered the buyout at a discount of 4.75pc to asset value.
This proposal and the boards similar moves in recent months to buy out other disaffected shareholders has caused the discount to narrow fast towards that 4.75pc target (yesterday it reached 4.59pc). It has averaged 9.8pc over the past 12 months and been as wide as 13pc, so this is an extremely noteworthy development.
For those long-suffering shareholders wishing to exit their holdings, seize the moment. Questor on January 5 advised readers to sell Alliance and invest instead in Witan, an equivalent global portfolio but one where the investment process is tested and where it has delivered results.
Alliance may indeed finally transform itself for the better. But weve been promised that many times before, only to be let down.
The Elliott episode has delivered Alliance a great and arguably highly beneficial kick in the backside. But the need remains for it to prove itself.
Questor says: sell
Just spoken to them (could do with a second source as backup and will be looking but don' t doubt them) but it is, as far as I can tell, absolutely true, bang on the money. Under current rules a full tax exempt, IHT included, until you extract (No tax in, no tax on income or gain, full tax on exit - the City has as 'word' for that but it escapes me) handed down father to son to grandson ad infinitum, girls definitely included from my shorthand, simplistic language.
That's amazing if true. It could also have an interesting social effect on some people. Why bother working and getting this pension income taxed at 40%, when you could just not bother and drawdown mum or dad's pension fund (if it was large enough to do so) and offset it against your own tax allowances? No doubt some SIPPs are!
Just had a brief read but will have a detailed one in the next few days. Initial impression is it sounds about as sweet as it can get - which always a little worrying because that's when I tend to assume I've missed something. The only thing the (no so) little blighters seem to miss out on is the 25% tax free lump sum available to the original pensioner - unless that too is buried somewhere deep in the detail.
Thanks very much for the heads up; certainly food for thought.
Witan is around 5%, so maybe ATST could be as well, if they clear out all the non-believers first, and they must be some way towards that.
Long term I'd guess there is always going to be selling pressure, because
1. Spreading capital gains
2. Most holders are probably baby boomers and will be withdrawing now. Alliance was about the only low cost global spread when I bought, now we have ETFs for the next generations.
I think you are probably looking for this:
As I read it your beneficiaries can continue with drawdown, paying tax on income only as they draw the income over their years, so your SIPP becomes their SIPP going forward, or can just be merged into theirs.
This seems to be a dramatic change in the advantage of pensions vs IHT, so I really hope I've got it right!
Well I certainly wouldn't recommend 'deciding to pop your clogs unexpectedly in the next 12/24 months' though how you decide the unexpected is new to me. Macabre humour(?) aside using the CGT allowance to the max to diversify sounds like a reasonable strategy though how long the discount will remain down here after Elliott are 'paid off' I have no idea. My fear is that's pretty much all that's holding it here but hold it here at least until the deal is approved is what I expect them to do as, if the price being offered to Elliott is close/same to the market price the deal is more likely to be approved; a significant difference in Elliott's favour smacks of one shareholder receiving preferential treatment over others and is more likely to raise objections and get it killed.
There is always the other option of winding the whole thing up and giving all shareholders best part of 100% NAV but the Directors are about as likely to propose that as turkeys voting for Christmas.
NAV. If you want a 'realistic' one always FairCum, the others have been used in the past so can be useful for like-4-like historical comparisons and maybe with other trusts than could the old fashioned way.
Fair means they value any debts at the current market price of replacing it, effectively marking-to-market which is exactly what they should do given they are marking the assets daily. Interest rates have fallen in recent years so any fixed interest debt is liable to have a 'high' interest rate attached, certainly higher than would be available at present. As such it's worth more to the debt holders than par. If ATST wanted to buy them out today then 'fair value' would be greater than par (where book value usually is).
Cum income because it's in the pipeline. Basically any accrued interest not yet paid on cash/bonds they hold plus any dividends gone ex but not yet received. Regardless of whether they sold those asset today that cash would still arrive in the near future - a very real asset. At these low interest rates it's not really worth trying to discount it to a present value as the difference would be tiny.
ATST is a global generalist. It does have significant US holdings hence some attempt to adjust any most recent NAV figure reported to reflect movements in $/£ and the FTSE100 as a proxy for the market in general. As much art as science given the I can't be ar5ed to replicate the whole ATST portfolio and revalue on a live basis - unless it's a significant movement doing just a tiny fraction of the work will capture the vast majority of any intra-day move. 4.8% after costs was where I had it yesterday when I pulled the trigger.
ummm, not sure here. Not sure a dead man is allowed to still have a pension. There was certainly something in HMGs documents about transfers only being IHT exempt if completed within 2 years. Can't remember exactly what. Makes sense to allow some time to wind things up, if not actual probate then I sure there's something similar needing to be done but I can't see HMG allowing people to let it roll indefinitely. I did talk it through with someone who was supposed to know (dream on!) and the word 'Trust' did come up. Maybe that's the only way to do it or maybe the only way he could generate a significant fee for himself?
I'm seeing the Pensionwise people next month. Not sure how much they'll know. Heard both good and bad - some 'doing charity' work, merely jumping through hoops to keep the Dept of Work and Pensions at bay when any benefits they receive are questions while others retired IFAs who really know their stuff and aren't looking to grab as much as possible for themselves. Or maybe a letter to YouInvest to see what they say - did get a reply to my previous query; took over 3 months but....
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.